How should Nigeria remove its petrol subsidy?
Abruptly and all at once, like the ripping of a band-aid? Or would a slow and steady phased removal over time be better?
Key takeaways:
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Nigeria’s petrol subsidy has become a burden on the government’s finances, and President Buhari has announced plans to remove it by June 2023.
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But how does a successful subsidy reform look? Indonesia’s 2003 and 2005 attempts provide contrasting lessons on subsidy reform.
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Proper communication, distribution of social benefits and people’s trust in the government are key to preventing a repeat of 2012’s subsidy reform attempt.
There’s no better time than now to have this conversation because Nigeria’s petrol subsidy has become the government’s white elephant—they can’t seem to get rid of it. The subsidy’s cost has outweighed its usefulness. For instance, last year, the poorest 20% of the Nigerian population only received 3% of the entire subsidy
